Amazon to collect sales tax from Massachusetts residents

Online retailer Amazon.com has reached a deal with Massachusetts to start collecting sales tax from Bay State residents.Associated Press file

BOSTON -- Massachusetts retailers are hailing a deal
reached between online seller Amazon.com and state officials to begin
collecting the state's 6.25 percent sales tax from Bay State residents
who order items through the website.

Gov. Deval Patrick announced
the agreement on Tuesday, a deal long sought by owners of traditional
"brick and mortar" stores in Massachusetts who say online tax-free
purchases put them at a critical disadvantage since they are required to
collect the tax on their products. They say the arrangement has
amounted to an automatic 6.25 percent discount for online merchants that
they can't match.

Under the agreement, Amazon will start collecting the Massachusetts sales taxes on Nov. 1, 2013.

"It's
a very big win for Main Street," said Jon Hurst, president of the
Retailer Association of Massachusetts. "Small merchants will compete
price-wise and service-wise. What they cannot accept is a
government-imposed advantage."

The governor said the state and
Amazon will work together to push for federal legislation that would
"resolve the sales tax issue by creating an equitable and simple
framework for collecting sales taxes" from all Internet sellers.

Amazon
vice president of global public policy Paul Misener said the company is
urging Congress to come to what he called a "final resolution to the
sales tax issue."

"Federal legislation is the only way to level
the playing field for all sellers, the only way for states to obtain
more than a fraction of the sales tax revenue that is already owed, and
the only way to fully protect states' rights," he said in a statement.

Amazon
now collects sales taxes on orders purchased in a number of states,
including New York, California and Texas, and has agreed to start
imposing levies in other states.

Massachusetts Secretary of
Administration and Finance Jay Gonzalez said he expected the agreement
to bring in "the lower tens of millions of dollars" more each year in
state revenues.

"It's not going to solve all of our revenue
challenges but it certainly will help," Gonzalez said. "It will help
mitigate the erosion of our sales tax base."

Estimates of how much
Massachusetts would collect in sales taxes from all online sellers
vary, but most put the number in hundreds of millions annually.

The
National Conference of State Legislatures estimates Massachusetts will
lose about $268 million in tax revenue in 2012 in uncollected sales
taxes for online and catalog purchases. State Treasurer Steven Grossman
said other estimates put the loss as high as $387 million for 2011 -- a
figure Grossman said could rise to $783 million by 2020 if Internet
businesses continue not to collect the tax.

Grossman said
traditional retailers are important to the state's economy also for the
hundreds of thousands of Massachusetts workers they employ.

"My
interest is in making sure that we protect those 500,000 retail jobs and
all those small retailers here who have been operating on an unlevel
playing field for so long," Grossman said. "Let people buy wherever they
want, but let's make sure the playing field is level."

The deal
in Massachusetts is similar to others Amazon has worked out with states
across the country, paving the way to start opening warehouses and
offering faster shipping in areas where tax disputes had previously
prevented it from putting down roots. Misener said Tuesday that Amazon
plans to add hundreds of high tech jobs in Massachusetts.

"We are thankful Amazon was willing to come to the table," Patrick said in a statement. "This agreement is a win for all sides."

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